Walgreens Shares Rise in Response to Sky's Bid Progress News

Walgreens Boots Alliance (NASDAQ:WBA) shares rose by 4% following reports that Sycamore Partners is securing bank financing for a potential acquisition exceeding $10 billion. According to Sky News, the private equity firm is in discussions with a group of lenders, including Bank of America, JP Morgan, and Wells Fargo, to arrange debt financing for the purchase of the leading retail pharmacy company.

The potential deal would transform Walgreens Boots Alliance from a public company to a private entity and could lead to the future sale of Boots, a UK-based chain operating approximately 1,900 stores and employing over 50,000 people. Speculations suggest that Stefano Pessina, who has undertaken numerous significant transactions involving Boots over the years, could become the majority shareholder of the British retailer following the acquisition.

Additionally, Sycamore Partners is expected to divest VillageMD, a clinical network staffed by physicians that Walgreens has already considered as a separate business move. The Wall Street Journal reported on Tuesday that discussions between Sycamore Partners and WBA are ongoing, contributing to a recovery in WBA's market value. The company's worth had fallen below $8 billion in recent months before recovering amid the acquisition talks.

Pessina, who holds approximately 17% of WBA, could strengthen his position as the primary owner of Boots, depending on the final structure of the Sycamore deal. This news comes after Walgreens halted its efforts to sell Boots, concluding that valuation expectations were not met, including offers from Apollo Global Management.

The potential change in ownership coincides with Boots' long-serving CEO Seb James departing for another opportunity in the healthcare sector, making way for new leadership. Boots has a rich history dating back to 1849, when John Boot established it as an herbal medicine shop in Nottingham.